Quotes: MENA   Enter Symbol: NewsLetter: Search: advanced

New rules lift GCC insurance business trebles to 18.4b  Join our daily free Newsletter

MENAFN - Khaleej Times - 09/07/2014
No. of Ratings : 0
Add to Mixx!



(MENAFN - Khaleej Times) The outlook for insurance business which has almost tripled through 2006-13 and with premiums increasing to 18.

The GCC insurance industry which has trebled its business to 18.4 billion in seven years will see its credit profile enhanced on the back of a string of regulatory measures Moody’s said on Tuesday.



These regulatory changes apart from improving the credit profile of the insurance sector will also help bring market stability and transparency by strengthening several vital aspects including capital requirements asset quality and reserve adequacy Moody’s analyst Mohammed Ali Riyazuddin Londe said.



The outlook for insurance business which has almost tripled through 2006-13 and with premiums increasing to 18.4 billion from 6.4 billion looks brighter following the introduction of a number of Takaful-specific regulations.



These regulations are credit-positive as they strengthen policyholder security directly by ensuring availability of capital or in some cases indirectly by improving capital access through requiring companies to list on the stock markets Londe said.



Also increasing mandatory insurance covers such as health unemployment motor third-party and liability have increased market awareness and is a credit positive for the market’s product diversification he said.



As the GCC economies keep diversifying away from oil and gas based revenues insurance markets have grown quickly and often aggressively. There have been varying degrees of sophistication and fierce pricing competition in many regional markets with several players determining premiums based on competitor rates rather than true risk-based underwriting the Moody’s analyst pointed out.



“This has driven volatility in underwriting results and hindered sustainable growth. Furthermore market awareness and the perception of commercial and retail consumers is negatively affected by the often constant flux in pricing variation in consistency of the services provided the quality of the products provided and claims handling” Londe said.



Regional insurance regulators are implementing enhanced regulations and guidelines to deal with the expansion in scope and type of risk covered by insurers and to address often poorly-performing markets. These reforms generally address risk-based capital or RBC and minimum asset liability management standards pricing adequacy corporate governance and transparency and introduce mandatory covers.



“We expect that the new regulations will lead to greater stability within the GCC insurance marketplace. Most of these regulations are evolutionary by way of market consultation which should help in the market’s understanding and acceptance of these albeit leading to a slightly slower implementation process” said Moody’s. It noted that the GCC insurance market’s capital adequacy has been governed by simplistic minimum capital requirements with no risk-related aspect although in most jurisdictions the minimum capital requirements are relatively high such as the UAE’s minimum capital of Dh100 million for insurers and Dh250 million for reinsurers.



This lack of risk-reflective regulatory capital needs fostered variation in the market in terms of the types and levels of risk taken on by insurers in terms of underwriting as well as investment risk with for example considerable deployment of capital into high risk assets such as real estate and equities.



Regulators in many states are now implementing RBC measures to ensure that the required capital is more closely correlated to the risks undertaken in aggregate by insurers.



Moody’s said it expects capital-centred regulatory changes to encourage insurers to focus on ensuring effective use of capital leading to improving underwriting quality and possibly reduce pricing volatility.



“We expect the increasing regulation of the insurance market will help to stabilise this volatility and further encourage market growth although additional regulatory intervention may still be required in certain scenarios to ensure well-functioning market” the ratings agency said.


 


Khaleej Times




  MENA News Headlines
 Dec 20 2014 - Etihad has no further A380 orders, Boeing 787 delayedMENAFN
(MENAFN) Etihad Airways is not interested in ordering any more Airbus A380s, while the launch of its first Boeing 787-9 Dreamliner into service has been delayed, Gulf News reported.The Dreamliner ...

 Dec 20 2014 - Saudi rail expansion contributes to domestic tourismMENAFN
(MENAFN) Saudi Railways Organization (SRO) President has lauded the efforts of Saudi Commission for Tourism and Antiquities (SCTA) in developing the tourism sector and preserving national heritage, ...

 Dec 20 2014 - Tunisia, Germany sign USD55.21m loan agreementMENAFN
(MENAFN) Tunisia and Germany have signed a loan agreement worth USD55.21 million for the modernization of more than 300 educational institutions in the different regions of the country, QNA ...

 Dec 20 2014 - Qatar- Magnificent Mirza wins stage 2The Peninsula
(MENAFN - The Peninsula) Overnight leader Azzedine Lagab yesterday retained his position at the Tour of Zubarah where defending champion Yusif Mirza of the UAE produced a late burst to win stage ...

 Dec 20 2014 - Aishwarya to make comeback with JazbaaKhaleej Times
(MENAFN - Khaleej Times) Jazbaa is a contemporary thriller set in modern-day Mumbai. Los Angeles - Former Miss World and popular Bollywood actress Aishwarya Rai Bachchan will make her comeback with ...

 Dec 20 2014 - UAE- Srikanth looks to change strategy for next two tiesKhaleej Times
(MENAFN - Khaleej Times) Indian star Kidambi Srikanth set to play Sugiarto and Jorgensen in Dubai event.Kidambi Srikanth faltered in the first set but made a strong comeback against Kento Momoto on ...

 Dec 20 2014 - UAE- Aussie rookie makes an early impactKhaleej Times
(MENAFN - Khaleej Times) Cannon makes statement for Mena Golf Tour with a steady performance at the Dubai Open. Chris Cannon was playing for the first time in an asian tour event Dubai — An ...

 Dec 20 2014 - UAE- Chen and Saina cruiseKhaleej Times
(MENAFN - Khaleej Times) South Koreas Bae shocks Chinese No.Saina Nehwal of India in action against Sung Ji Hyun of South Korea at the BWF Destination Dubai World Superseries Finals on Thursday. ...

 Dec 20 2014 - UAE- Teary-eyed for 132 dreams lostKhaleej Times
(MENAFN - Khaleej Times) Pak ambassador condemns Taleban for using Islams cover to justify massacre Abu Dhabi: The Pakistani community in Abu Dhabi gathered at the embassy on Thursday morning to ...

 Dec 20 2014 - IT teacher steals students iPad sells it onlineKhaleej Times
(MENAFN - Khaleej Times) The teachers theft was allegedly busted after she posted an advertisement on a popular website to sell the iPad. Dubai: An Information Technology (IT) teacher is standing ...

more...


 






Google

 
 

Middle East North Africa - Financial Network

MENAFN News Market Data Countries Tools Section  
 

Middle East North Africa - Financial Network
Arabic MENAFN

Main News
News By Industry
News By Country

Islamic Finance News
Private Equity News

How-To Guides
Technology Section

Travel Section

Search News

Market Indices
Quotes & Charts

Global Indices
Arab Indices

Commodoties

Oil & Energy

Currencies Cross Rates
Currencies Updates
Currency Converter

USA Stocks
Arab Stocks
 

Algeria 
Bahrain 
Egypt 
Iraq
Jordan 
Kuwait 
Lebanon
Morocco 
Oman 
Palestine
Qatar 
Saudi Arabia 
Syria
Tunisia 
UAE 
Yemen

Weather
Economic Calendar
Financial Glossary


Financial Calculators

RSS Feeds [XML]

Corporate Monitor

Events

Real Estate
Submit Your Property

Arab Research
Buy a Research

Press Releases
Submit your PR

Join Newsletters


 
© 2014 menafn.com All Rights Reserved.  Terms of Service | Privacy Policy | Contact Us | Advertise | About MENAFN | Career Opportunities | Feedback | Help